NBC Universal Not Hip on iTunes TV Rentals

NBC Universal CEO Jeff Zucker doesn’t seem overly interested in signing up for Apple’s US$0.99 TV show rentals program any time soon. He sees the sub one dollar price point as too low and thinks it would devalue his network’s shows, according to Reuters.

“We do not think 99 cents is the right price point for our content… We thought it would devalue our content,” he said. Mr. Zucker’s sentiments mirror those of Time Warner, which is also sitting out iTunes TV show rentals.

Mr. Zucker added that content is already available for purchase at the iTunes Store for $1.99 per show.

Apple introduced its low cost show rental program during a special media event at the beginning of September. So far, only Fox and ABC are on board with iTUnes Store TV show rentals.

Rental shows are available to the the iPhone and iPod touch running iOS 4.1, and will be available on the second generation Apple TV when it ships later this month.

Mr. Zucker is simply hiding behind some numbers, instead of saying what the real reason is for holding back: they are afraid of Apple and its might.

Very simple math can determine whether $1 is too little. First, you find out how much is NBC/Uni making per minute of advertising time on their prime time shows. Average that out, then figure out how much per individual show (8 minutes for every 30 minutes of programming). Divide that number by average ratings for the shows to figure out how much revenue each individual viewer is bringing in for each show. Add in any revenue you may be getting form cable operators for carrying your network (negligible). If this number is greater than $1, Zucker is correct.

My guess is, the final number will be significantly below $1. I looked for some numbers and could only find Super Bowl, where the final number came down to approximately $2 per hour. Considering that this is the mother lode, both for advertisers, as well as networks, I would say that Mr. Zucker is simply avoiding the truth.

Not ignoring that NBC is now or shortly will be majority owned by Comcast, an old-line cable provider that stands to lose big time, if the Internet replaces the cable as the source of video entertainment, I wasn’t aware that NBC’s shows had any value.

Another way to estimate the value of a single NBC program is to calculate, from one’s cable bill, how much each channel gets after the cable co’s take. As I recall, we pay about US$1.00/month for major channels like NBC, give or take, and maybe $0.50/month for minor channels.

At that rate, at $1 per *single* show, NBC would be raking it in. Reader vasic is right: Zucker is being disingenuous.

Of course he’s being disingenuous. He doesn’t trust Apple, and he’s got a great little string to pull. Keep the pay for shows, which Apple doesn’t like so much anymore. Deny them the rentals, which Apple wants everyone to jump on board.

Apple will not be the company to unify digital content because the media companies won’t let it. Google has the YouTube/Viacom problem, which will keep it from being that company. Microsoft has the anti-trust stigma that will take a few more years to shed. The smaller companies are focussed on niche delivery models.

Realistically, the cable companies are much better suited to provide unified rental/sales access to all the content. The media companies already know how to deal with the cable companies. Most important, they know how to fight fair with each other. The charades are well-orchestrated and always get resolved win/win. Apple in particular doesn’t know how to fight fairly with its partners when there’s a dispute. *cough* Adobe *cough*.